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April 17, 2017

Banking on AI – an Opportunity or a Threat?

New AI technology is putting financial institutions at risk of becoming invisible to their customers. At the same time, financial service firms can harness AI to counter this threat and add more value to their customer relationships.

In a recent speech, Bill Gates heralded the arrival of AI as “the holy grail that anyone in computer science has been thinking about.” The latest industry statistics appear to bear out this statement. According to Gartner, 85 percent of all customer interactions will no longer require customer service representatives by the end of the decade. Instead, virtual assistants and chatbots will carry out more and more decisions for people on their behalf.

There is certainly an appetite for AI amongst consumers – a recent Accenture survey shows that over 70 percent of consumers want to have access to AI-powered advice for banking and insurance services.

But not all are convinced that AI will usher in a golden age for financial institutions. KPMG believes that by 2030 banks will become invisible to customers, hidden behind Siri-like personal assistants that carry out all of our personal and financial obligations. According to the company’s vision – sketched out in our recent webinar – banks will shed their branches, call centers and sales teams, and, in the worst-case scenario, be relegated to the position of behind-the-scenes product providers.

So how can banks use AI to strengthen customer relationships to avoid this situation?

Increase interaction

To begin with, banks can deliver more value to customers on a day-to-day basis by becoming a trusted advisor. For example, the bank may alert a customer when account balance is predicted to be too low and offer some options to address the situation ahead of time. Alternatively, if the customer has a large balance, the bank might suggest transferring some funds into a savings account. Or if a customer is traveling abroad, the bank may provide instructions and tips for using the bank’s card overseas to minimize fees and optimize exchange rates.

Based on real-time information and delivered in the right context, these sorts of messages are proven to generate impressive engagement and customer satisfaction rates.

Omnichannel engagement

But initiating a conversation with the customer is just the first step. Building on the trust established through ongoing interaction that delivers value to the customer – there is an opportunity to continue the dialog and move it to a channel that allows for deeper realtionships. For example, the bank might send out small, bite-sized pieces of content on a popular channel like Facebook or Whatsapp, then offer more detailed information on the bank’s mobile app.

Greater share of wallet

There is compelling evidence that prioritizing and personalizing content can significantly boost the banks’ share of wallet. Delivering relevant pieces of personalized content to the customer in a timely fashion can result in an increase in mobile transfers, travel-related purchases, and requests for credit, to name just a few examples.

Lastly, chatbots and other forms of artificial intelligence can be used to target specific segments of existing and new customers such as millenials, students, young parents, or recent retirees.

Shape the future

Twenty years ago, few would have predicted that people would be using smart phones and tablets to work and play. The same could be said about the future of banking. Although there are sound reasons to believe that banks may eventually end up as faceless utility services, this is just one of several possible scenarios.

As a banker, the choices are clear: either accept the invisible future as a foregone conclusion, or harness AI into a competitive advantage for the bank.